I’m living here in La Jolla (renting – sold my house in North County last December)…
My wife and I constantly are looking at the homes for sale here in La Jolla. It’s a weird market. It can’t be looked at easily as it is VERY segmented… If it is a great property, big dollars (over 3M$) it’s a whole other ball game – has very, very little to do with the RE bubble. These homes are purchased by older people, wealthy people, people who have made huge money during the current administration. These people are not working 9-5 for a company and trying to handle a mortgage, their purchases have nothing to do with real estate values or anticipated values. They buy because they can, and if the house goes up or down in price it is not going to change their lives.
If the price is 2.5M or under, prices have come down dramatically, they are taking longer to sell, and the vast majority of the houses are pretty terrible. It’s hard to purchase a tiny house on a busy road for a millon dollars. Just not worth it. Even the realtors have a tough time talking about how wonderful the properties are at these prices – no level of salesmanship can sell a crappy 1950-70’s house for 1.3-2 million dollars while the short, medium and long term risk for appreciation is so significant.
All the houses here in La Jolla with flaws (too small, under renovated, over renovated, too near noise, too near construction, too expensive, smelly, mouldy, etc.) aren’t selling… they are sitting on the market or are being taken off the market. As the only houses which still sell easily are ones which are in the minority (the nice houses, near nice houses, renovated, real ocean views), this keeps prices for La Jolla high, but isn’t real world when you look at the vast majority of houses which don’t or can’t sell.
If you want a $3M – $25M property you really don’t care about bubbles!!! A neighbor is in the building business – he paid $15M for a house which was on the market for a long time at $25M. This isn’t reality for most people…
The only way to really see what is happening is to look at houses which are on the market, have been taken off the market, and look at strata (houses under 1200 ft, under 2000 feet, under 2500 feet, over 3000 feet), and look at by specific neighborhood. Birdrock is nothing like the summit, Upper hermosa isn’t the same as on the beach… Look within strata and you will see some massive changes in both directions!
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Personal note: We almost closed on a 1.8M house here which would have been 1.2M in Carmel Valley, 600K in the East County, or $325K anywhere in the USA… When we decided that it would be insane to take that level of risk based on what the market is doing – I thought the realtor would was going to have a heart attack… It’s tough out there right now!
p.s. Some houses which were renovated and were trying to be flipped are coming on as rentals, there is a lot of both fear and desperation in this town, but not with the folks overlooking the water in private compounds….
